Exemptions and rollovers

This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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There are exemptions and rollovers that may allow you to reduce, defer or disregard your capital gain or capital loss.

There is no rollover or exemption for a capital gain you make when you sell an asset and put the proceeds into a superannuation fund, use the proceeds to purchase an identical or similar asset, or you transfer an asset into a superannuation fund. For example, if you sell a rental property and put the proceeds into a superannuation fund, or use the proceeds to purchase another rental property, a rollover is not available. However, an asset, or the capital proceeds from the sale of an asset, may be transferred into a superannuation fund in order to satisfy certain conditions under the small business retirement exemption. For more information about the CGT concessions for small business, see the Guide to capital gains tax concessions for small business 2006-07 (NAT 8384).

Another important exemption is for a capital gain or capital loss you make from a CGT event relating to a dwelling that was your main residence. This rule can change, however, depending on how you came to own the dwelling and what you have done with it - for example, if you rented it out (see chapter 6 for more information).

The following capital gains and capital losses are also disregarded:

a car (that is, a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers) or motorcycle or similar vehicle

a decoration awarded for valour or brave conduct, unless you paid money or gave any other property for it

collectables acquired for $500 or less

a capital gain from a personal use asset acquired for $10,000 or less

any capital loss from a personal use asset

CGT assets used solely to produce exempt income or some amounts of non-assessable non-exempt income

a CGT asset that is your trading stock at the time of a CGT event

shares in a pooled development fund

compensation or damages you receive for any

wrong or injury you suffer in your occupation

wrong, injury or illness you or your relatives suffer

compensation you receive under the firearms surrender arrangements

winnings or losses from gambling, a game or a competition with prizes

a reimbursement or payment of your expenses (but not for the loss, destruction or transfer of an asset) under a scheme established by an Australian government agency, a local government body or foreign government agency. The scheme needs to be established under an Act or legislative instrument (for example, regulations or local government by-laws)

a reimbursement or payment of expenses under the Unlawful Termination Assistance Scheme or the Alternative Dispute Resolution Assistance Scheme

a reimbursement or payment of your expenses under the General Practice Rural Incentives Program or the Sydney Aircraft Noise Insulation Project

a reimbursement or payment made under the M4/M5 Cashback Scheme

a re-establishment grant made under section 52A of the Farm Household Support Act 1992

a dairy exit payment under the Farm Household Support Act 1992

a sugar industry exit grant paid under the Sugar Industry Reform Program

payments made under the German Forced Labour Compensation Programme (GFLCP), and certain payments or property received by Australian residents as a result of persecution during the Second World War

some types of testamentary gifts

any capital gain or capital loss that would otherwise arise from the assignment to the Commonwealth of a right in relation to a general insurance policy held with an HIH company, the trustee of the HIH trust or a prescribed entity

any capital gain or capital loss you make from your rights being created or your rights ending in relation to the making of a superannuation agreement (as defined in the Family Law Act 1975), the termination or setting aside of such an agreement or such an agreement otherwise coming to an end

any capital gain or capital loss you make from the ending of rights that directly relate to the breakdown of your marriage or de facto marriage, including if you receive cash as part of your marriage breakdown settlement

any capital gain or capital loss that a complying superannuation entity makes from a CGT event happening in relation to a segregated current pension asset

in certain circumstances, a general insurance policy, a life insurance policy or an annuity instrument

the transfer of a superannuation interest in a small superannuation fund to another small superannuation fund on the breakdown of a marriage, but not a de facto marriage

your gain on disposal of eligible venture capital investments, if you are a qualifying investor - see Venture capital concessions (capital gains tax) - overview, available on our website.

Other exemptions: capital gains

You may reduce your capital gain if, because of a CGT event, you have included an amount in your assessable income other than as a capital gain. For example, if you make a profit on the sale of land that is included in your assessable income as ordinary income, you don't also include that profit as a capital gain.

from the expiry, forfeiture, surrender or assignment of a lease if the lease is not used solely or mainly for the purpose of producing assessable income

from a payment to any entity of personal services income that is included in an individual's assessable income under the alienation of personal services income provisions, or any other amount attributable to that income

as an exempt entity.

Rollovers

You may defer or disregard - that is, rollover - a capital gain or capital loss until a later CGT event happens. The types of rollovers available are listed below. Only the first four types are covered in detail in this guide. If you would like information on the others, see how to contact us.

Marriage breakdown

In certain cases where an asset or a share of an asset is transferred from one spouse to another after their marriage breaks down, any CGT is automatically deferred until a later CGT event happens (for example, until the former spouse sells the asset to someone else). For more examples of how CGT obligations are affected by marriage breakdown, see chapter 8.

Loss, destruction or compulsory acquisition of an asset

You may defer a capital gain in some cases where a CGT asset has been lost or destroyed or is compulsorily acquired (see chapter 7).

Scrip-for-scrip

You may be able to defer a capital gain if you dispose of your shares in a company or interest in a trust as a result of a takeover (see chapter 5).

Demergers

You may be able to defer a capital gain or capital loss if a CGT event happens to your shares in a company or interest in a trust as a result of a demerger (see chapter 5).

Other replacement asset rollovers

You may be able to defer a capital gain or capital loss when you replace an asset in the following circumstances (if you would like information on these rollovers, contact us or your recognised tax adviser):

an individual or trustee disposes of assets to, or creates assets in, a wholly owned company

partners dispose of assets to, or create assets in, a wholly owned company

a CGT event happens to small business assets and you acquire replacement assets

your statutory licence is renewed or extended

you are a financial service provider who had assets - for example, licences - replaced on transition to the financial services reform (FSR) regime

your property is converted to strata title

you exchange shares in the same company or units in the same unit trust

you exchange rights or options to acquire shares in a company or units in a unit trust

you exchange shares in one company for shares in an interposed company

you exchange units in a unit trust for shares in a company

a body is converted to an incorporated company

you acquire a Crown lease

you acquire a depreciating asset

you acquire prospecting and mining entitlements

you dispose of a security under a securities lending arrangement, or

a trust restructure ends your ownership of units or interests.

Other same asset rollovers

You may be able to defer a capital gain or capital loss when you transfer or dispose of assets in the following circumstances (if you would like information on these rollovers, contact us or your recognised tax adviser):

an individual or trustee transfers a CGT asset to a wholly owned company

a partner transfers their interest in a CGT asset to a wholly owned company

a CGT asset is transferred between related companies

a trust disposes of a CGT asset to a company under a trust restructure

a CGT event happens because of a change to a trust deed of a complying approved deposit fund, a complying superannuation fund or a fund that accepts worker entitlement contributions, and

a transfer of a CGT asset from one small superannuation fund to another because of a marriage breakdown.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.